LUSAKA, ZAMBIA — Despite Zambia being a leading maize producer in Africa, the country’s economy is constraining performance of the sub-sector, a situation that has been exacerbated by a runway national debt crisis.

The debt crisis has rendered the Food Reserve Agency (FRA), a government entity with mandates to stabilize food supply in Zambia, unable to pay for grain delivered in the 2020-21 marketing year.

In fact, at the end of the last quarter of 2021, when the effects of COVID-19 were weighing heavily on Zambia’s economy, the country’s agriculture minister, Mtolo Phiri, said the government was unable to pay farmers for maize (corn) they supplied to the FRA.

“There are no immediate plans to support the affected farmers,” he said.

At the end of November 2021 when Zambia’s external debt had spiraled to $12.9 billion, up from $1.98 billion in 2011, the FRA was only able to purchase and pay for 500,000 tonnes of maize.

However, Phiri told the country’s parliament that the government was at the time mobilizing money to pay the maize producers through various measures such as allowing the FRA to sell some of the maize to raise funds so that it can pay the affected farmers. 

“Sometime in the 12th National Assembly, the Government of the Republic of Zambia (GRZ) went into a rather unbridled frenzy of borrowing funds and, as a consequence of that borrowing and our continued spending on capital projects, our country is in a debt crisis,” the minister said in a statement to parliament.

“We have spent so much money — especially by the previous government — on fuel and agricultural subsidies that today we owe in excess of $2 billion,” he said.

At the end of November 2021 when Zambia’s external debt had spiraled to $12.9 billion, up from $1.98 billion in 2011, the FRA was only able to purchase and pay for 500,000 tonnes of maize.

“Zambia is absolutely broke and is in a debt crisis,” Phiri said. “We simply do not have the money to pay maize farmers.

“We have, therefore, allowed the FRA to export 450,000 tonnes so that we can use that money to pay our suffering farmers, some of whom are not on the Farmer Input Support Programme (FISP), and are, therefore, failing to buy fertilizers and seed.”

FISP is a government scheme that has been credited for the increased productivity among smallholder farmers since it was first introduced in 2001. It initially was referred to as the Fertilizer Support Program but was revised and renamed in 2009 to the FISP to reach more smallholder farmers, who typically produce more than 90% of Zambia’s total corn crop, with a mandate to supply government-subsidized seed and fertilizer to smallholder farmers to increase efficiencies and food security. 

Production doubles since 2000

Maize, the single most important crop in Zambia, is widely grown in all the country’s 10 provinces, with the Central, Eastern and Southern provinces contributing more than 50% of this national staple food. It has become a flashpoint indicating the serious financial malaise that the current government, which came into power in August 2021, is facing.

 According to the US Department of Agriculture (USDA), Zambia produced the largest maize crop on record in the 2021-22 marketing year, reaching 3.6 million tonnes, nearly 7% larger than the 3.4 million tonnes produced in 2020-21. 

Under the current financial year, Finance and National Development Minister Situmbeko Musokotwane has announced measures to further open Zambia’s maize market while ensuring food security by proposing the removal of the 10% export duty. 

“Over the past 20 years, Zambia more than doubled production through a combination of increased area and productivity, turning the country into a net exporter of corn,” the report said.

The USDA estimates that Zambia will consume about 2.4 million tonnes of corn in 2021-22, leaving excess supplies available for exports to neighboring countries.

Zambia is looking to the export market to support the country’s maize farmers, some of whom have expanded into producing and exporting maize, mealie-meal, maize bran, wheat bran, soybeans and soy cake.

During the 2021-22 marketing year, Zambia is reported to have authorized issuance of export permits for 1.17 million tonnes of maize to neighboring markets with a further allocation of 450,000 tonnes to the FRA, 270,000 tonnes to the Millers Association of Zambia and another 450,000 to the Grain Traders Association of Zambia, according to the USDA’s Famine Early Warning Systems (FEWS) Network, a leading provider of early warning and analysis on acute food insecurity around the world.

Under the current financial year, Finance and National Development Minister Situmbeko Musokotwane has announced measures to further open Zambia’s maize market while ensuring food security by proposing the removal of the 10% export duty. The proposal, which took effect on Nov. 1, 2021, is expected to reduce Zambia’s revenue by K18.1million (US$1 million) for the 2021-22 financial year. Key export destinations for Zambia’s maize are Zimbabwe, Tanzania, Kenya, Mozambique, Malawi and South Africa.

However, Zambia’s 1.5 million tonnes of surplus maize that is available for exports from the 2021-22 marketing year could be hit by the likely impact of a bumper harvest in the Africa markets of Zimbabwe, Malawi, Tanzania, Mozambique and South Africa.

“The regional demand for corn is weaker than usual as Zimbabwe, Malawi, Tanzania, Mozambique and South Africa produced above average corn crops in the 2021-22 marketing year,” according to a USDA report.

“In fact, South Africa produced its second largest corn crop on record and should be able to increase corn exports by almost 40% to 3.5 million tonnes,” the USDA said. “Zimbabwe produced the largest corn crop since 1984 and announced in May 2021 that it stopped issuing import permits for corn and corn meal to local grain millers.”

FEWS said the Southern Africa region that includes Zambia and its export markets is expected to have an adequate maize supply to cover demand in 2022-23.

However, FEWS cautioned that “access, especially among import-dependent countries, is expected to remain constrained by high prices at source markets.”

New trade agreement with DRC

Meanwhile, Zambia is exploring new markets for its surplus corn with focus shifting to the Democratic Republic of Congo (DRC), a country that is heavily dependent on imported maize, as local production is typically unable to cover local demand.

Just before the onset of the COVID-19 pandemic, Zambia signed a memorandum of understanding with the DRC for export of 600,000 tonnes of maize.

Market analysts view the agreement as a possible deterrence of the informal trade flows between the two countries and instead promote formalized maize exports to the DRC.

With maize production reaching the peak in Zambia, the landlocked country expected to leverage on the MoU with DRC to export its increasing surplus maize during the 2021-22 marketing year.

Apart from the direct exports and the FRA purchases, Zambia also has been utilizing the World Food Programme as a destination for its surplus maize. For example, during the 2021-22 marketing year, the country exported an estimated 80,000 tonnes of maize through the WFP, increasing the country’s projected total maize export volumes to about 700,000 tonnes.

Previous efforts to reduce maize export volumes, such as the September 2020 moratorium by the government on exports of maize and maize meal until Zambia secured at least 1 million tonnes of maize, floundered after the FRA purchased only 350,000 tonnes in the 2020-21 marketing year.

Elsewhere, the Agricultural Policy Research and Outlook Institute (IAPRI) said the higher prices offered by the private sector contributed to the FRA’s failure to meet even half of the targeted 1 million tonnes of strategic grain reserves. Instead, by the end of the FRA’s statutory buying season on Oct. 31, the agency only had managed to procure about 350,000 tonnes, equivalent of 34% of the target.

National staple food

Meanwhile, Zambia is one of the top maize consuming countries in Africa, being the national staple food in the form of a porridge called “nshima.”

Maize provides an estimated 60% of the caloric requirements of Zambia’s 18.4 million people with the USDA projecting human maize consumption to increase to 1.8 million tonnes during the 2021-22 marketing year. It estimated that industrial requirements account for about 130,000 tonnes while animal feed for the poultry and livestock industries will account for another 285,000 tonnes.

Despite the current impact of the Ukraine/Russia conflict on global grain markets, coming soon after the lifting of lockdowns that crippled most economies, including Zambia, this landlocked country’s domestic maize demand is expected to increase by at least 5% in the 2021-22 marketing year to 2.4 million tonnes,  driven largely by an anticipated spike in production

Zambia’s medium-term maize production and trade is likely to be influenced by the restructuring of the IFPIS program under a new comprehensive agriculture support scheme that began in the 2022-23 season. 

“This program will be cost-effective, better targeted and equitable across beneficiaries,” Musokotwane explained.

Shem Oirere is a Nairobi, Kenya-based freelance journalist who specializes in covering the African grain markets. He may be reached at soirere@gmail.com.